Houston-based Amplify Energy Corp. and a subsidiary of Tulsa-based Midstates Petroleum Company, Inc. announced an all-stock merger, according to a press release issued on Monday.
The combined company will maintain headquarters in Houston and trade on the New York Stock Exchange under the AMPY ticker. Ken Mariani, Amplify’s President and Chief Executive Officer, will remain at the helm of the combined company. The merger will also create a new Board of Directors to include members who currently serve on the Amplify and Midstates boards.
Under terms of the merger agreement, Amplify shareholders will receive 0.933 shares of newly issued Midstates common stock for each Amplify share of common stock. The merger is expected to close in the third quarter of 2019, at which time Amplify and Midstates stockholders will each own 50% of the outstanding shares of the combined company.
“Amplify and Midstates are both well positioned to generate significant free cash flow from proved developed producing assets, and we believe that stockholders of both companies will benefit from the reduced costs and enhanced scale achieved by this transaction,” said Ken Mariani. “The combined company’s strong balance sheet, liquidity and free cash flow create additional capacity to return capital to stockholders and support improved market performance. In addition, we believe that there are significant benefits in continuing to increase scale in this market and moving forward we intend to consider other opportunistic combinations and acquisitions that create value through cost synergies and free cash flow accretion.”
“This merger-of-equals with Amplify is exactly the type of value maximizing transaction we hunted for when we announced our strategic review process earlier this year,” said David Sambrooks, Midstates President and Chief Executive Officer. “The stock-for-stock combination provides for substantial value enhancing synergies and the potential to accelerate additional capital returns moving forward, creating significant value for shareholders of both Midstates and Amplify. Ken and the Amplify management team have a demonstrated focus on capital discipline and capital returns to stockholders, while operating safely and efficiently and are well suited to run the combined Company.”
The merger will marry Amplify’s oil and natural gas operations focused in the Rockies, offshore California, East Texas/North Louisiana and South Texas with Midstates’ Mississippian Lime play E&P operations in Oklahoma.